Prepare a statement of cash flows using the direct method.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Condensed financial data of Flounder Company for 2020 and 2019 are presented below.

FLOUNDER COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2020 AND 2019
   
2020
 
2019
Cash
 
$1,760
   
$1,180
 
Receivables
 
1,780
   
1,280
 
Inventory
 
1,610
   
1,920
 
Plant assets
 
1,880
   
1,660
 
Accumulated depreciation
 
(1,220
)
 
(1,190
)
Long-term investments (held-to-maturity)
 
1,310
   
1,400
 
   
$7,120
   
$6,250
 
             
Accounts payable
 
$1,170
   
$880
 
Accrued liabilities
 
190
   
240
 
Bonds payable
 
1,390
   
1,540
 
Common stock
 
1,910
   
1,730
 
Retained earnings
 
2,460
   
1,860
 
   
$7,120
   
$6,250
 

 

FLOUNDER COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue
 
$7,020
Cost of goods sold
 
4,780
Gross margin
 
2,240
Selling and administrative expenses
 
910
Income from operations
 
1,330
Other revenues and gains
   
   Gain on sale of investments
 
70
Income before tax
 
1,400
Income tax expense
 
540
Net income
  860
Cash dividends
 
260
Income retained in business
 
$600


Additional information:

During the year, $80 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020.

Prepare a statement of cash flows using the direct method.

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